Forget those antiquated government statistics. U.S. corporate investment is booming—just take a look overseasWhen is a slowdown not a slowdown? On the face of it, the government's statistics tell a very convincing story about cautious companies and weak business investment. For example, so far in 2007 new orders for nondefense capital goods, such as computers, trucks, and machinery, are barely higher than they were a year ago, an omen, perhaps, of tough times ahead for corporate profits.
There's only one problem. Corporate America is still spending big time, just increasingly outside the U.S. A BusinessWeek analysis of financial reports from more than 1,000 large and midsize U.S.-based companies shows that global capital expenditures in the fourth quarter of 2006 were actually up 18.1% over the previous year, a number that includes nonresidential construction as well as info-tech equipment and machinery. The comparable growth for domestic business investment, which is all the government reports each quarter: only 8.9%, without adjusting for inflation.
So far in 2007, U.S. corporations seem to be keeping up the global spending pace. Alcoa Inc. (AA), which reported first-quarter earnings on Apr. 10, boosted capital spending by 32% over a year earlier, in part to fund the construction of the company's new smelter in Iceland, as well as investment projects in the U.S., Brazil, Russia, and China. And Boise (Idaho)-based Micron Technology Inc. (MU) spent almost $1 billion more in the first quarter of 2007 than it did a year earlier: The semiconductor maker developed new plants in China and Singapore and expanded capacity at existing facilities in Virginia and Utah.
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